The long-awaited cybersecurity executive order (EO), which will ultimately establish national cybersecurity standards for critical infrastructure, was issued by President Obama on February 12, 2013. At the same time, the White House issued a Presidential Policy Directive/PPD 21, which further advances the White House cybersecurity policy.

This EO and accompanying policy directive are intended to launch a multi-year standards-setting, regulatory and legislative process that will result in new cybersecurity standards, regulations, information-sharing channels, and changes in liability for critical infrastructure and government contractors. On February 13, 2013, the White House, Department of Homeland Security (DHS), National Institute of Standards and Technology (NIST), Department of Justice, and National Security Agency provided a joint presentation on the contents of the EO and next steps in its implementation.

Why Does the EO Matter?

The EO has the potential to touch upon every sector of the U.S. economy. For the vast majority of U.S. critical infrastructure that is owned or operated by the private sector, the EO could have a profound effect. Businesses that do not define themselves as critical infrastructure may nevertheless be impacted by the executive order if their customers or affiliates include critical infrastructure. As a result, implementation of the EO and any companion legislation will create a number of opportunities and risks for a variety of industry sectors. Existing cybersecurity practices, standards or regulations could be incorporated, altered, or rendered obsolete by the new federal standard.

What Does the EO Do?

The EO includes major roles for DHS and NIST:

The EO is designed to address Critical Infrastructure, which is defined as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters."

DHS will designate certain industries as Critical Infrastructure at Greatest Risk, which is defined as "critical infrastructure where a cybersecurity incident could reasonably result in catastrophic regional or national effects on public health or safety, economic security, or national security" and will begin receiving certain additional cyber threat information.

NIST is required to establish a Cybersecurity Framework, which is defined as "a framework to reduce cyber risks to critical infrastructure." The Cybersecurity Framework is required to be established within one year and must be updated "as necessary." The framework:

"shall include a set of standards, methodologies, procedures, and processes that align policy, business, and technological approaches to address cyber risks"

"incorporate[s] voluntary consensus standards and industry best practices to the fullest extent possible"

"shall be consistent with voluntary international standards when such international standards will advance the objectives of this order"

"shall provide a prioritized, flexible, repeatable, performance-based, and cost-effective approach, including information security measures and controls, to help owners and operators of critical infrastructure identify, assess, and manage cyber risk"

DHS is required to establish a Voluntary Critical Infrastructure CybersecurityProgram to encourage owners and operators of critical infrastructure to adopt the Cybersecurity Framework. An annual report will be developed with a list of the owners and operators of Critical Infrastructure at Greatest Risk that are participating in the Voluntary Cybersecurity Program. The voluntary program does not include incentives for participation, but DHS, Treasury and Commerce are required to submit recommendations to the president on the establishment of incentives, which may require legislation.

The EO is intended to increase Information Sharing between the government and critical infrastructure by "increase[ing] the volume, timeliness, and quality of cyber threat information shared with U.S. private sector entities so that these entities may better protect and defend themselves against cyber threats." The EO will expand the Enhanced Cybersecurity Services (ECS) program, which was previously available to commercial service providers, to all critical infrastructure.

The EO requires an annual assessment and report on Privacy and Civil Liberties Protections.

What Are the Next Steps?

NIST will publish a request for information (RFI) in the near future that solicits input from critical infrastructure owners and operators, federal agencies, state, local, territorial and tribal governments, standards-setting organizations, other members of industry, consumers, solution providers and other stakeholdersregarding "existing consensus standards, practices and procedures that have been effective and that can be adopted by industry to protect its digital information and infrastructure from the full range of cybersecurity threats." NIST will hold workshops on the EO beginning in early April 2013. The White House indicated that it will initiate a series of meetings with critical industry sectors to begin the implementation process.

Congress is also expected to develop companion legislation that may expand upon, or in some cases, restrict the scope of the EO. Rep. Mike Rogers (R-Mich.), chairman of the House Intelligence Committee, and Rep. Mike McCaul (R-Texas), chairman of the House Homeland Security Committee, have indicated that they will be introducing new cybersecurity legislation within the next few weeks. Chairman McCaul announced his committee will hold a hearing on the EO within two weeks. Meanwhile, the Senate is considering a joint committee hearing that would include the Homeland Security and Government Affairs Committee, the Commerce Committee and the Intelligence Committee that would begin the process in the Senate to respond legislatively to the cybersecurity executive order.

Accordingly, interested parties should be prepared to participate in the NIST process and engage with the White House, DHS and Congress as appropriate.

Why Is Legislation Needed?

The EO is designed to establish a national approach to cybersecurity. However, an EO is limited to existing statutory authority, so legislation will be necessary to address those issues that the president could not address in the EO, such as liability protections, incentives for participation and parameters for information sharing. President Obama announced the issuance of the cybersecurity executive order and called on Congress to pass legislation to address these gaps in the 2013 State of the Union address:

America must also face the rapidly growing threat from cyber-attacks. (Applause.) Now, we know hackers steal people’s identities and infiltrate private emails. We know foreign countries and companies swipe our corporate secrets. Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions, our air traffic control systems. We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.

And that’s why, earlier today, I signed a new executive order that will strengthen our cyber defenses by increasing information sharing, and developing standards to protect our national security, our jobs, and our privacy. (Applause.)

But now Congress must act as well, by passing legislation to give our government a greater capacity to secure our networks and deter attacks. This is something we should be able to get done on a bipartisan basis. (Applause.)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

All the intelligence you need, in one easy email:

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.